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Balancing the Demands of Multi-Store Ownership

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Balancing the Demands of Multi-Store Ownership (Conclusion)

Pointers from Paulie B: Don’t lose sight of what made your original store a success

GLENDALE, Ariz. — Owning and operating more than one laundromat at a time has more advantages than disadvantages. If done right, you can enhance the sales, profit and performance for each mat. You can enjoy some efficiencies of scale, such as better buying power from vendors. Landlords will look upon you much more favorably than if you’re just starting your first mat with no experience. You can shuttle employees from one mat to the others (bailed me out many times when one was slammed with drop-offs).

The obvious disadvantage is more work, and most of the typical mat headaches, including floods, crime, faltering equipment, and people issues.

But mats are a natural to operate at multiple locations because many are already being run at least partially by absentee ownership. However, I caution anyone to learn the business inside and out first before entrusting your mat to be operated by others for you.

In Part 1, I touched on things like location strategies, branding, and competitive positioning. Let me close with a few more thoughts:

You Need a Great Crew — All businesses need great workers. You can’t grow your business without them, because you can’t be in two or more places at the same time!

Running a mat absentee is entirely possible if you have some experience under your belt, and if you have a staff you can trust. It all begins with the hiring (“How to Hire Great Employees”), and continues with good management (“Motivating Employees to Do Their Best”).

Once you have your crew, you can check off the rest of the requirements:

While two mats don’t add up to twice the time and work, you still should be realistic about whether you can handle another mat.

You need plenty of capital to launch another store. Don’t over leverage it. Better to wait and save until you have enough money.

I know someone in a supply business who opened one location. It did well, so the owner opened a second, which also did well. This person borrowed against their home to open a third one and, boom, the economy dropped, and then Amazon provided the coup de grâce. The owner ended up losing everything—their three stores and their house.

You need a good surveillance system for each location, with visuals available on your cell phone and other devices you own. If the mats are unattended, I recommend using the public address option that many surveillance systems have.

Managers and the Peter Principle — I can take or leave managers, because I’ve had more trouble with them than regular crew. It takes a really special person to be a great mat manager, and those people are very rare. If you find one, treat them well.

A manager should have some form of motivating compensation to help them treat the business as if it were their own, such as a “piece of the action” or a bonus every time a sales goal is reached.

Familiarize yourself with the Peter Principle, a concept that states that people are promoted to the level of their incompetence. Just because a certain employee wows everyone with how well he/she folds laundry, and has a high production rate of drop-offs per hour, it doesn’t mean that he/she will be a great manager. Having been with you a long time should not be your only reason to promote them.

Choose an honest person who has already demonstrated an ability to think on their feet, to defuse angry moments, to be the person who others look to for advice when you’re not around.

Maintenance is More Important Than Ever — If you open new mats, you must be able to maintain them as well as if you still had only the one. Be careful not to bite off more than you can chew.

I needed help with repairs as my business grew, so I stopped doing my own tub bearing jobs, most plumbing work, and certain motor replacements. That helped free me of the heavy “bull” work so I could concentrate more on tech issues, which I prefer. You may grow big enough to hire your own maintenance person.

Communicating with Staff is Much Easier — When I started, there were no cell phones. Not even beepers! I had to routinely check in with my mats each day, usually from pay phones. It was hard to stay on top of everything. Now, technology makes it much easier to communicate with your mats.

I used to post memos behind the counters for my employees. Now, you can do group messages to your crews. You may even get a suggestion or two as you are texting back and forth, plus you have an electronic “paper trail” so no one can argue that you never told them.

Hiring a Laundry “Contractor” — This is an industry standby for people who aren’t interested in the work and headaches of running a drop-off service (let alone pickup and delivery). Instead of micromanaging all your drop-off details, you can make a written contract with your best employee to hire them as a contractor.

There are too many pros and cons (more cons, I believe) for me to list here. You gain some freedom but lose some important controls. Check with your accountant about the tax ramifications.

Legal Considerations — There are different strategies for structuring your business if you have more than one mat.

Some owners want a limited liability corporation (LLC) that owns all the locations. For this, you need to carry enough insurance that will protect the entire chain. The standard used to be $1 million in liability protection for one mat, but nowadays I think you need at least $2 million. If you have one corporation owning multiple locations, you’ll need to protect the entire chain, perhaps $2 million per location. Consult your insurance agent about your specific needs.

I preferred to have separate S corporations for each of my locations, with each having the same DBA name to encourage brand recognition. If one mat is sued, it won’t bring down the whole chain. Yes, it costs more, but you’ll sleep better, especially if each mat has decent insurance.

(Quick tip: Always write business letters and emails from your corporate position, not in a personal way. If you communicate as an individual, your “corporate veil” could be pierced, putting your personal assets at risk.)

To summarize, while multi-store ownership could foster some changes, don’t forget what has made your original store a success.

Miss Part 1? You can read it HERE.

Have a question or comment? E-mail our editor Bruce Beggs at [email protected].